The 7% hike will result in the same pricing as in the pre-GST time: Vikram Kirloskar, Toyota Kirloskar

"There was a sudden rush and lot of pressure to deliver as many vehicles as possible before Sunday. The newer cess is sure to upset some customers", said Toyota's Vikram KirloskarET Now | September 11, 2017, 12:36 IST

Vikram Kirloskar, Toyota KirloskarAs the government starts implementing higher cess on luxury cars, mid-sized sedans and sports utility vehicles from today; keeping in mind the SUV arena which is a niche market in the country, Vikram Kirloskar of Toyota Kirloskar talks to ET Now about how much the SUV market might be affected post the new cess regime. Edited excerpts:

Considering that the SUV market is still a very niche market and given that auto sales have been strong, do you think 7% cess hike is likely to be digested by the consumers or it could have immediate impact on sales?

Vikram Kirloskar: I think this 7% will result in the same pricing as was prevalent before the GST started. So I guess we will be back in the same situation. It is not higher than what it was when the GST was implemented.

Can I say this is a neutral move and the industry demand is likely to remain untouched or unaffected?

Vikram Kirloskar: I am hoping that now we have all the festivals coming up, I hope it does not affect demand so much.

There was certainly a rush for vehicles while this thing was going on and there was lot of pressure to deliver as many vehicles as possible before Sunday but this 7% will definitely get passed on and I am sure some people are or customers are going to be a little upset. But I think it will pass because this was prevalent price before.

Most definitely but what we are trying to understand is – would this in any way impact the festive demand this year versus last year when there was no GST and so companies could take discounts or make sales schemes more attractive to lure customers?

Vikram Kirloskar: Well I think that any way some companies will do that. Whatever typically during the festival season lot of incentives are given, I am sure there will be some this year. I do not know whether we will be doing much incentives.

Typically, we do not have so many incentives on the Fortuner but we will see how it goes. But I am just relatively relaxed that it did not go beyond the previous pre-GST regime.

Confirming to us is that the entire cess hike is going to be passed on. Companies are unlikely to retain it?

Vikram Kirloskar: I doubted. I think it will all be passed on. Just like when the GST came in, we immediately reduced the prices fully, the full amount. We did not retain anything. Same thing when the GST is changed, we will pass the full thing on.

What are your pre-channel checks suggesting, would that impact demand in any way?

Vikram Kirloskar: Luckily both for Innova and Fortuner there has been considerable backlog, so to get a real feel of what is happening will take some time.

So do you think right now we should not really scrutinise the auto sales on a monthly basis, do you think we should not be looking at the SUV dispatch numbers for the next two-three months?

Vikram Kirloskar: I think you should look on quarterly basis, running quarterly basis. It makes more sense, last three months plus last three months, last three months, keep doing it that way. I think that will give you a much better idea of what is happening.

And in the run-up to the festival season now that clarity has come in on GST, are you excited about the demand prospects?

Vikram Kirloskar: Well I am happy the story is over because every time there is lack of clarity and there is lack of decision, there is confusion in the market. My sincere hope is that this current whatever GST numbers have been fixed will not change at least for 12 months to 18 months so that there is stability on the pricing and the customer knows what he is in for.

Prices of most SUVs were cut between Rs 1.1 lakh and Rs 3 lakh following the implementation of GST, which subsumed over a dozen central and state levies like excise duty, service tax, and VAT from July 1.